GATT’s Article 24 allows regional trading arrangements to be set up
Regional agreements have allowed groups of countries to negotiate rules and commitments that go beyond what was possible at the time multilaterally.
In turn, some of these rules have paved the way for agreement in the WTO.
Regional trading arrangements could hurt the trade interests of other countries.
Normally, setting up a customs union or free trade area would violate the
WTO’s principle of equal treatment for all trading partners (“most-favoured-nation”).
GATT’s Article 24 allows regional trading arrangements to be set up as a special exception, provided certain strict criteria are met.
Regional integration should complement the multilateral trading system and not threaten it.
Article 24 says if a free trade area or customs union is created, duties and other trade
barriers should be reduced or removed on substantially all sectors of trade in the group.
Non-members should not find trade with the group any more restrictive than before the group was set up.
Similarly, Article 5 of the General Agreement on Trade in Services provides for
economic integration agreements in services.
5.1! THE WTO’S RULES
When a WTO member enters into a regional integration arrangement through which it
grants more favourable conditions to its trade with other parties to that arrangement than to other WTO members’ trade, it departs from the guiding principle of non-discrimination defined in Article I of GATT, Article II of GATS, and elsewhere.
WTO Members are however permitted to enter into such arrangements under specific conditions which are spelled out in three sets of rules:
Paragraphs 4 to 10 of Article MMIV of GATT (as clarified in the Understanding
on the Interpretation of Article MMIV of the GATT 1994) provide for the formation and operation of customs unions and free-trade areas covering trade in goods ;
Enabling Clause (i.e., the 1979 Decision on Differential and More
Favorable Treatment, Reciprocity and Fuller Participation of Developing
Countries) refers to preferential trade arrangements in trade in goods between developing country Members;
Article V of GATS governs the conclusion of RTAs in the area of trade in services, for both developed and developing countries.
OPERATION OF ARTICLE XXIV- regional agreements
Article XXIV is in practice inoperative.
“Three possible reasons for why WTO members refrain from challenging regional agreements before a panel are:
(i) all WTO members (but for Mongolia) have now
concluded regional agreements and no one sees an interest in clarifying or tightening the rules under Article MMIV as this might work against one’s own regional programs; (ii) WTO members may not trust panels to make binding decisions on the economically complex question of Article MMIV compliance,
if a regional agreement does not liberalize “substantially all trade” within the region and thereby violates Article MMIV, third parties may not have an incentive to challenge this inconsistency as the most logical result would be more discrimination (i.e. more regional liberalization and preferences) rather than less discrimination.
DEVELOPMENT EXCEPTION
DEFINITION OF A “DEVELOPING COUNTRY” IN THE WTO
Developing country status in the WTO brings certain rights. There are for example
provisions in some WTO Agreements which provide developing countries with longer
transition periods before they are required to fully implement the agreement and
developing countries can receive technical assistance.
THE ENABLING CLAUSE
The Enabling Clause enables developed members to give differential and more favorable treatment to developing countries.
The Enabling Clause is the WTO legal basis for the Generalized System of Preferences (GSP).
Under the GSP, developed countries offer non-reciprocal preferential treatment
(such as zero or low duties on imports) to products originating in developing countries.
Preference-giving countries unilaterally determine which countries and which products are included in their schemes.
The Enabling Clause is also the legal basis for regional arrangements among developing countries and for the Global System of Trade Preferences (GSTP), under which a number of developing countries exchange trade concessions among themselves.
🡪Article IV of the GATS aims at increasing the participation of developing countries in world trade. It refers, among other things, to strengthening the domestic services competitiveness of developing countries through access to technology and improving their access to information networks.
Article XII allows developing countries and countries in transition to restrict trade in
services for reasons of balance-of-payment difficulties.
Article 66 of the TRIPS Agreement least developed countries with a longer time-frame to implement all the provisions of the TRIPS Agreement and encourages technology transfer.
Article 67 refers to the provisions of technical assistance.
Unit IV (7)
IPR
🡪the rights given to persons over the creations of their minds.
Creator has exclusive right over the use of his/her creation
For a certain period of time.
Divided into 2 areas
Copyright
🡪The rights of authors of literary and artistic works (books etc)
For a min of 50 years
🡪Rights of performers and broadcasting organizations
Purpose: encourage and reward creative work.
Industrial property
Industrial property is divided into two main areas:
1) trademarks: protection of signs that distinguish goods and services from one undertaking to another and also geographical indications for example which identifies a good that originates from a certain place
Social Aim of IP protection:
Stimulate and ensure fair competition
Protect consumers, by enabling them to make informed choices between various goods and services. Indefinite time protection
protect the results of investment in the development of new technology,
give incentive and means to finance research and development activities.
facilitate the transfer of technology in the form of foreign direct investment, joint ventures and licensing.
protection is usually given for a finite term (typically 20 years in the case of patents).
Exclusive rights given are generally subject to a number of limitations and exceptions, aimed at balancing the legitimate interests of right holders and of users.
The TRIPS Agreement, which came into effect on 1 January 1995, is to date the most comprehensive multilateral agreement on intellectual property.
It covers areas of intellectual property
copyright and related rights
trademarks
The three main features of the Agreement are:
STANDARDS
TRIPS sets out the minimum standards of protection to be provided by each Member.
These standards require
Substantive obligations of the main conventions of the WIPO, the Paris
Convention for the Protection of Industrial Property (Paris Convention) and the
Berne Convention for the Protection of Literary and Artistic Works (Berne
Convention) in their most recent versions, must be complied with.
The relevant provisions are to be found in Articles 2.1 and 9.1 of the
TRIPS Agreement, which relate, respectively, to the Paris Convention and to the
Berne Convention.
The TRIPS Agreement is thus sometimes referred to as a Berne and Paris-plus agreement.
Enforcement
The second main set of provisions deals with domestic procedures and remedies for the enforcement of intellectual property rights.
general principles applicable to all IPR enforcement procedures
Provisions on civil and administrative procedures and remedies,
provisional measures,
special requirements related to border measures and criminal procedures, which specify, in a certain amount of detail, the procedures and remedies that must be available so that right holders can effectively enforce their rights.
Dispute settlement
The Agreement makes disputes between WTO Members about the respect of the TRIPS obligations subject to the WTO's dispute settlement procedures.
Agreement provides for principles, such as national and most-favoured-nation treatment.
Developing countries will have a longer period to phase them in.
Special transition arrangements operate in the situation where a developing country does not presently provide product patent protection in the area of pharmaceuticals.
The TRIPS Agreement is a minimum standards agreement, which allows Members to provide more extensive protection of intellectual property if they so wish.
Members are left free to determine the appropriate method of implementing the provisions of the Agreement within their own legal system and practice.
General provisions
basic obligation on each Member country is to accord the treatment in regard to the protection of intellectual property provided for under the Agreement to the persons of other Members.
Article 1.3 defines who these persons are. These persons are referred to as “nationals” but include persons, natural or legal, who have a close attachment to other Members without necessarily being nationals.
The criteria for determining which persons must thus benefit from the treatment provided for under the Agreement are those laid down for this purpose in the main pre-existing intellectual property conventions of WIPO, applied of course with respect to all WTO Members whether or not they are party to those conventions.
These conventions are the Paris Convention, the Berne Convention, International
Convention for the Protection of Performers, Producers of Phonograms and Broadcasting
Organizations (Rome Convention), and the Treaty on Intellectual Property in Respect of
Integrated Circuits (IPIC Treaty).
Articles 3, 4 and 5 include the fundamental rules on national and most-favoured-nation treatment of foreign nationals, which are common to all categories of intellectual
property covered by the Agreement.
Article 7(8) Berne convention (in Trips too?)
Certain other limited exceptions to the MFN obligation are also provided for.
The general goals of the TRIPS Agreement are contained in the Preamble of the Agreement,
Goals include the
reduction of distortions and impediments to international trade,
promotion of effective and adequate protection of intellectual property rights,
ensuring that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade.
Above goals should be read in conjunction with Article 7, where IP rights should contribute to the promotion of technological innovation, to the mutual advantage of producers and users of technological knowledge
in a manner conducive to social and economic welfare,
and to a balance of rights and obligations.
Article 8, entitled “Principles”, recognizes the rights of Members to adopt measures for public health and other public interest reasons and to prevent the abuse of intellectual property rights, provided that such measures are consistent with the provisions of the TRIPS Agreement.
Substantive standards of protection
COPYRIGHT
POINT OF DEPARTURE FROM PROTECTION
The point of departure is expressed in Article 9.1 under which Members are obliged to comply with the substantive provisions of the Paris Act of 1971 of the Berne Convention, i.e. Articles 1 through 21 of the Berne Convention (1971) and the Appendix thereto.
In addition to requiring compliance with the basic standards of the Berne Convention, the
TRIPS Agreement clarifies and adds certain points.
Article 9.2 confirms that copyright protection shall extend to expressions and not to ideas, procedures, methods of operation or mathematical concepts as such.
Article 10.1 provides that computer programs, shall be protected as literary works under the Berne Convention (1971)🡪They must be protected under copyright and that those provisions of the Berne Convention that apply to literary works shall be applied also to them. 🡪the form in which a program is, whether in source or object code, does not affect the protection. 🡪The obligation to protect computer programs as literary works means e.g. that only those limitations that are applicable to literary works may be applied to computer programs.
general term of protection of 50 years applies to computer programs.
Article 10.2 - databases and other compilations of data or other material shall be protected as such under copyright. The contents must constitute intellectual creations.
Article 11 provides that authors shall have right to authorize or to prohibit the commercial rental to the public of originals or copies of their copyright works.
Cinematographic works is subject to the impairment test:
🡪 a Member is excepted from the obligation unless such rental has led to widespread copying of such work which is materially impairing the exclusive right of reproduction conferred in that Member on authors and their successors in title
According to the general rule contained in Article 7(1) of the Berne Convention as
incorporated into the TRIPS Agreement, the term of protection shall be the life of the
author and 50 years after his death. Paragraphs 2 through 4 of that Article specifically
allow shorter terms in certain cases.
🡪These provisions are supplemented by Article 12 of the TRIPS Agreement, which provides that whenever the term of protection of a work, other than a photographic work or a work of applied art, is calculated on a basis other than the life of a natural person, such term shall be no less than 50 years from the end of publication.
Article 13 requires Members to confine limitations or exceptions to exclusive rights to
certain special cases which do not conflict with a normal exploitation of the work and do
not unreasonably prejudice the legitimate interests of the right holder.
(This is a horizontal provision that applies to all limitations and exceptions permitted under the provisions of the Berne Convention and the Appendix thereto as incorporated into the TRIPS Agreement.)
RELATED RIGHTS
The provisions on protection of performers, producers of phonograms and broadcasting
organizations are included in Article 14.
Article 14.1, performers shall have the possibility of preventing the unauthorized fixation of their performance on a phonogram (e.g. the recording of a live musical performance).
The fixation right covers only aural, not audio-visual fixations. Performers must also be in position to prevent the reproduction of such fixations.
Article 14.2, Members have to grant producers of phonograms an exclusive reproduction right.
Article 14.4, an exclusive rental right at least to producers of phonograms.
The provisions on rental rights apply also to any other right holders in phonograms as determined in national law. This right has the same scope as the rental right in respect of computer programs. It is not subject to the impairment test as in respect of
cinematographic works.
YET, it is limited by a so-called grand-fathering clause,
according to which a Member, had in force a system of equitable remuneration of right
holders in respect of the rental of phonograms, may maintain such system provided that
the commercial rental of phonograms is not giving rise to the material impairment of the
exclusive rights of reproduction of right holders.
Broadcasting organizations shall have, in accordance with Article 14.3, the right to
prohibit the unauthorized fixation, the reproduction of fixations, and the rebroadcasting
by wireless means of broadcasts.
Art. 14.5 The term of protection is at least 50 years for performers and producers of phonograms, and 20 years for broadcasting organizations (Article 14.5).
Article 14.6 provides that any Member may, in relation to the protection of performers,
producers of phonograms and broadcasting organizations, provide for conditions,
limitations, exceptions and reservations to the extent permitted by the Rome Convention.
TRADEMARKS
The basic rule contained in Article 15 is that any sign, or any combination of signs,
capable of distinguishing the goods and services of one undertaking from those of other
undertakings, must be eligible for registration as a trademark, provided that it is visually
perceptible. Such signs, INCLUDING
personal names,
letters,
numerals,
figurative elements
🡪 must be eligible for registration as trademarks.
Members are free to determine whether to allow the registration of signs that are not visually
perceptible (e.g. sound or smell marks).
Members may make registrability depend on use.
three years must have passed after that filing date before failure to realize an intent to use
is allowed as the ground for refusing the application (Article 14.3).
The Agreement requires service marks to be protected in the same way as marks
distinguishing goods (see e.g. Articles 15.1, 16.2 and 62.3).
Article 16.1- The owner of a registered trademark must be granted the exclusive right to prevent all third parties not having the owner's consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of
confusion. In case of the use of an identical sign for identical goods or services, a
likelihood of confusion must be presumed.
The TRIPS Agreement contains certain provisions on well-known marks, which
supplement the protection required by Article 6bis of the Paris Convention, as
incorporated by reference into the TRIPS Agreement, which obliges Members to refuse
or to cancel the registration, and to prohibit the use of a mark conflicting with a mark
which is well known.
First, the provisions of that Article must be applied also to services.
Second, it is required that knowledge in the relevant sector of the public acquired not
only as a result of the use of the mark but also by other means, including as a result of its promotion, be taken into account. Furthermore, the protection of registered well-known
marks must extend to goods or services which are not similar to those in respect of which
the trademark has been registered, provided that its use would indicate a connection
between those goods or services and the owner of the registered trademark, and the
interests of the owner are likely to be damaged by such use (Articles 16.2 and 3).
🡪Members may provide limited exceptions to the rights conferred by a trademark, such as
fair use of descriptive terms, provided that such exceptions take account of the legitimate
interests of the owner of the trademark and of third parties (Article 17).
Initial registration, and each renewal of registration, of a trademark shall be for a term of
no less than seven years. The registration of a trademark shall be renewable indefinitely
(Article 18).
Cancellation of a mark on the grounds of non-use cannot take place before three years of
uninterrupted non-use has elapsed unless valid reasons based on the existence of
obstacles to such use are shown by the trademark owner. Circumstances arising
independently of the will of the owner of the trademark, such as import restrictions or
other government restrictions, shall be recognized as valid reasons of non-use.
Use of a trademark by another person, when subject to the control of its owner, must be
recognized as use of the trademark for the purpose of maintaining the registration
(Article 19).
It is further required that use of the trademark in the course of trade shall not be
unjustifiably encumbered by special requirements, such as use with another trademark,
use in a special form, or use in a manner detrimental to its capability to distinguish the
goods or services (Article 20).
GEOGRAPHICAL INDICATIONS
Geographical indications are defined as “indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical originW (Article 22.1).
🡪Thus, this definition specifies that the quality, reputation or other characteristics of a good can each be a sufficient basis for eligibility as a geographical indication, where they are essentially attributable to the geographical origin of the good.
In respect of all geographical indications, interested parties must have legal means to
prevent use of indications which mislead the public as to the geographical origin of the
good, and use which constitutes an act of unfair competition within the meaning of
Article 10bis of the Paris Convention (Article 22.2).
The registration of a trademark which uses a geographical indication in a way that
misleads the public as to the true place of origin must be refused or invalidated if the legislation so permits or at the request of an interested party (Article 22.3).
Article 23 provides that interested parties must have the legal means to prevent the use of
a geographical indication identifying wines for wines not originating in the place
indicated by the geographical indication. This applies even where the public is not being
misled, there is no unfair competition and the true origin of the good is indicated or the
geographical indication is accompanied be expressions such as “kind”, “type”, “style”,
“imitation” or the like. Similar protection must be given to geographical indications
identifying spirits when used on spirits. Protection against registration of a trademark
must be provided accordingly.
Article 24 contains a number of exceptions to the protection of geographical indications.
These exceptions are of particular relevance in respect of the additional protection for
geographical indications for wines and spirits. For example, Members are not obliged to
bring a geographical indication under protection, where it has become a generic term for
describing the product in question (paragraph 6). Measures to implement these provisions
shall not prejudice prior trademark rights that have been acquired in good faith
(paragraph 5). Under certain circumstances, continued use of a geographical indication
for wines or spirits may be allowed on a scale and nature as before (paragraph 4).
Members availing themselves of the use of these exceptions must be willing to enter into
negotiations about their continued application to individual geographical indications
(paragraph 1). The exceptions cannot be used to diminish the protection of geographical
indications that existed prior to the entry into force of the TRIPS Agreement (paragraph 3). The TRIPS Council shall keep under review the application of the provisions on the
protection of geographical indications (paragraph 2).
INDUSTRIAL DESIGNS
Article 25.1 of the TRIPS Agreement obliges Members to provide for the protection of
independently created industrial designs that are new or original. Members may provide
that designs are not new or original if they do not significantly differ from known designs
or combinations of known design features. Members may provide that such protection
shall not extend to designs dictated essentially by technical or functional considerations.
…
PATENTS
The TRIPS Agreement requires Member countries to make patents available for any
inventions, whether products or processes, in all fields of technology without
discrimination, subject to the normal tests of novelty, inventiveness and industrial
applicability. It is also required that patents be available and patent rights enjoyable
without discrimination as to the place of invention and whether products are imported or
locally produced (Article 27.1).
There are three permissible exceptions to the basic rule on patentability. One is for
inventions contrary to ORDRE PUBLIC or morality; this explicitly includes inventions
dangerous to human, animal or plant life or health or seriously prejudicial to the
environment.
The use of this exception is subject to the condition that the commercial
exploitation of the invention must also be prevented and this prevention must be
necessary for the protection of ORDRE PUBLIC or morality (Article 27.2).
The second exception is that Members may exclude from patentability diagnostic,
therapeutic and surgical methods for the treatment of humans or animals (Article
27.3(a)).
The third is that Members may exclude plants and animals other than micro-organisms
and essentially biological processes for the production of plants or animals other than
non-biological and microbiological processes. However, any country excluding plant
varieties from patent protection must provide an effective SUI GENERIS system of
protection. Moreover, the whole provision is subject to review four years after entry into
force of the Agreement (Article 27.3(b)).
The exclusive rights that must be conferred by a product patent are the ones of making,
using, offering for sale, selling, and importing for these purposes. Process patent
protection must give rights not only over use of the process but also over products
obtained directly by the process. Patent owners shall also have the right to assign, or
transfer by succession, the patent and to conclude licensing contracts (Article 28).
Members may provide limited exceptions to the exclusive rights conferred by a patent,
provided that such exceptions do not unreasonably conflict with a normal exploitation of
the patent and do not unreasonably prejudice the legitimate interests of the patent owner,
taking account of the legitimate interests of third parties (Article 30).
The term of protection available shall not end before the expiration of a period of 20
years counted from the filing date (Article 33).
Members shall require that an applicant for a patent shall disclose the invention in a
manner sufficiently clear and complete for the invention to be carried out by a person
skilled in the art and may require the applicant to indicate the best mode for carrying out
the invention known to the inventor at the filing date or, where priority is claimed, at the
priority date of the application (Article 29.1).
If the subject-matter of a patent is a process for obtaining a product, the judicial
authorities shall have the authority to order the defendant to prove that the process to
obtain an identical product is different from the patented process, where certain
conditions indicating a likelihood that the protected process was used are met (Article 34).
Compulsory licensing and government use without the authorization of the right holder
are allowed, but are made subject to conditions aimed at protecting the legitimate
interests of the right holder. The conditions are mainly contained in Article 31. These
include the obligation, as a general rule, to grant such licences only if an unsuccessful
attempt has been made to acquire a voluntary licence on reasonable terms and conditions
within a reasonable period of time; the requirement to pay adequate remuneration in the
circumstances of each case, taking into account the economic value of the licence; and a requirement that decisions be subject to judicial or other independent review by a distinct
higher authority. Certain of these conditions are relaxed where compulsory licences are
employed to remedy practices that have been established as anticompetitive by a legal
process. These conditions should be read together with the related provisions of
Article 27.1, which require that patent rights shall be enjoyable without discrimination as
to the field of technology, and whether products are imported or locally produced.
PROTECTION OF NDISCLOSED INFORMATION
The TRIPS Agreement requires undisclosed information -- trade secrets or know-how --
to benefit from protection. According to Article 39.2, the protection must apply to
information that is secret, that has commercial value because it is secret and that has been
subject to reasonable steps to keep it secret. The Agreement does not require undisclosed
information to be treated as a form of property, but it does require that a person lawfully
in control of such information must have the possibility of preventing it from being
disclosed to, acquired by, or used by others without his or her consent in a manner
contrary to honest commercial practices. “Manner contrary to honest commercial
practices” includes breach of contract, breach of confidence and inducement to breach, as
well as the acquisition of undisclosed information by third parties who knew, or were
grossly negligent in failing to know, that such practices were involved in the acquisition.
The Agreement also contains provisions on undisclosed test data and other data whose
submission is required by governments as a condition of approving the marketing of
pharmaceutical or agricultural chemical products which use new chemical entities. In
such a situation the Member government concerned must protect the data against unfair
commercial use. In addition, Members must protect such data against disclosure, except
where necessary to protect the public, or unless steps are taken to ensure that the data are
protected against unfair commercial use.
CONTROL OF ANTI-COMPETITIVE PRACTICES IN CONTRACTUAL LICENCES
Article 40 of the TRIPS Agreement recognizes that some licensing practices or
conditions pertaining to intellectual property rights which restrain competition may have
adverse effects on trade and may impede the transfer and dissemination of technology
(paragraph 1). Member countries may adopt, consistently with the other provisions of the
Agreement, appropriate measures to prevent or control practices in the licensing of
intellectual property rights which are abusive and anti-competitive (paragraph 2). The
Agreement provides for a mechanism whereby a country seeking to take action against
such practices involving the companies of another Member country can enter into
consultations with that other Member and exchange publicly available non-confidential
information of relevance to the matter in question and of other information available to
that Member, subject to domestic law and to the conclusion of mutually satisfactory
agreements concerning the safeguarding of its confidentiality by the requesting Member
(paragraph 3). Similarly, a country whose companies are subject to such action in another
Member can enter into consultations with that Member (paragraph 4).
PATENTING OF LIFE FORMS AND THE PROTECTION OF TRADITIONAL KNOWLEDGE
Art. 27.3(b) reads as follow:
“3. Members may also exclude from patentability:
(b) plants and animals other than micro-organisms, and essentially biological
processes for the production of plants or animals other than non-biological
and microbiological processes. … The provisions of this subparagraph shall
be reviewed four years after the date of entry into force of the WTO
Agreement.”
Under the so-called Doha Round, Members are considering amending art. 27.3(b). In this
context, delegations of different countries have made different proposals.
Somewhat oversimplifying, delegations of several African countries argue that art.
27.3(b) should be reviewed. They propose that the revised regime should embody the
following innovations (India, Brazil and some other countries argue for partial revisions
as summarized in point 2):
1. Patenting of all life forms, including micro-organisms and non-biological and
microbiological processes should be prohibited. Moreover, it should be clarified
that patenting genes and gene fragments should be prohibited.
2. In any case, misappropriation of genetic resources and traditional knowledge
should be prevented by the introduction of new disclosure requirements. In
particular, the grant of patents should be conditional on:
a requirement of disclosure of the source and country of origin of the
genetic resources and of the traditional knowledge used or involved in the
inventions
evidence of prior informed consent (PIC) through approval of the
authorities under the relevant national regime
evidence of fair and equitable benefit sharing with the provider of the
genetic resource or with the holder of the traditional knowledge.
By contrast, the US delegation argues that art. 27.3(b) should not be amended and should
be interpreted in the sense that:
1. Micro-organisms, non-biological and microbiological processes should be
patentable. Patenting of genes, genes fragments and gene technologies should be
allowed, as under US law.
2. New disclosure requirements are not necessary and should not be added to the
present regime.
Would you amend art. 27.3(b)? If yes, how and why? If not why not?
TRIPS AND PUBLIC HEALTH: THE SITUATION IN LATE 2005
In the main Doha Declaration of November 2001, ministers stressed that it is important to
implement and interpret the TRIPS Agreement in a way that supports public health — by
promoting both access to existing medicines and the creation of new medicines.
They also issued a separate declaration on TRIPS and public health, designed to respond
to concerns about the possible implications of the TRIPS Agreement for access to
medicines. Paragraph 6 of this declaration dealt with some unfinished business — how to
help poorer countries unable to make medicines domestically, have access to cheaper
generics made under compulsory licensing.
BACKGROUND
Now largely settled is the question of how to ensure that patent protection for pharmaceutical products does not prevent people in poor countries from having access to medicines — while at the same time maintaining the patent system’s role in providing incentives for research and development into new medicines.
The remaining task is to convert a General Council decision of 30 August 2003 into a
permanent amendment of the TRIPS Agreement.
Underlying the deliberations are flexibilities such as “compulsory licensing” that are
written into the TRIPS Agreement — governments can issue compulsory licenses to
allow a competitor to produce a patented product or use a patented process without the
permission of the patent holder, under certain conditions aimed at safeguarding the
legitimate interests of the patent holder.
Parallel importing is also possible. This is where a product sold by the patent owner more
cheaply in one country is imported into another without the patent holder’s permission.
Countries’ laws differ on whether they allow parallel imports. The TRIPS Agreement
states that governments cannot bring legal disputes to the WTO on this issue; the Doha
declaration on TRIPS and public health clarified that this means countries are free to set
up their rules and procedures dealing with parallel imports.
(These flexibilities do not have to be put into practice to have an effect. They are
sometimes used as a means of bargaining. For example the threat of a compulsory licence
can encourage a patent holder to reduce the price.)
3.1 THE DOHA MANDATE
Before the 2001 Doha Ministerial Conference, some governments were unsure of how
these flexibilities would be interpreted, and how far their right to use them would be
respected. The African Group (all the African members of the WTO) took the lead in
pushing for clarification.
A large part of this was settled when WTO ministers issued a special Declaration on
TRIPS and Public Health at the Doha meeting in November 2001, alongside their main
Doha Declaration.
In the main declaration, they stressed that it is important to implement and interpret the
TRIPS Agreement in a way that supports public health — by promoting both access to
existing medicines and the creation of new medicines.
In the separate declaration, they agreed that the TRIPS Agreement does not and should
not prevent members from taking measures to protect public health.
They underscored countries’ ability to use the flexibilities that are built into the TRIPS
Agreement, in particular compulsory licensing and parallel importing.
And they agreed to extend exemptions on pharmaceutical patent protection for least developed countries until 2016. (The TRIPS Council completed the legal drafting task on
this in mid-2002.)
On one remaining question, they assigned further work to the TRIPS Council — to sort
out how to provide extra flexibility, so that countries unable to produce pharmaceuticals
domestically can import patented drugs made under compulsory licensing. (This is
sometimes called the “Paragraph 6” issue, because it comes under that paragraph in the
separate Doha declaration on TRIPS and health.)
The issue arises because Article 31(f) of the TRIPS Agreement says products made under
compulsory licensing must be “predominantly for the supply of the domestic market”.
This applies directly to countries that can manufacture drugs — it limits the amount they
can export when the drug is made under compulsory licence. And it has an indirect
impact on countries unable to make medicines — they might want to import generics
made in countries under compulsory licence, but find that Article 31(f) poses an obstacle
to other countries supplying them.
The TRIPS Council was instructed to find a solution and report to the General Council on
this by the end of 2002. However it was not until 30 August 2003, shortly before the
Cancmn Ministerial Conference, that consensus could be reached.
The agreement takes the form of a General Council decision to waive provisions of
Article 31(f) subject to certain conditions. It enables countries with production capability,
to export drugs made under compulsory licence to countries that cannot manufacture
them.
The waiver will last until the TRIPS Agreement is amended. It includes provisions on
transparency (which give a patent-owner some opportunity to react by offering a lower
price), and special packaging and other methods to avoid the medicines being diverted to
other markets. An annex describes what a country needs to do in order to declare itself
unable to make the pharmaceuticals domestically.
Over 30 developed countries have made a commitment within the decision not to import
under this decision. And, as recorded in a statement by the General Council chairperson,
a number of others stated they will only do so in emergencies or extremely urgent
situations.
Consensus was achieved with the aid of a Chairman’s statement, made at the time the
waiver was adopted, which sets out a number of shared understandings about the waiver.
The decision refers to drugs needed to address the public health problems recognized in
Paragraph 1 of the original declaration that ministers issued in Doha. This says: “We recognize the gravity of the public health problems afflicting many developing and least developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and
other epidemics.”
SINCE THEN..
The final step is to convert the waiver into a permanent amendment of the TRIPS
Agreement. The decision said members would complete this by the end of June 2004, but
consensus has not yet been reached on how to achieve this. Part of the discussion is about
the best way to handle the text, for example how much to put in Article 31 itself and how
much in an annex to the TRIPS Agreement.
But members also differ on how closely the amendment should follow the waiver and
how to handle the separate chairperson’s statement made at the time the General Council
adopted the decision. Some developing countries want to drop provisions that they
consider to be unnecessary for an amendment. Some developed and other countries say
the waiver was so difficult to negotiate that it should be translated directly into an
amendment in order to avoid further delays.
Although the waiver is temporary, so long as there is no agreement on a permanent
amendment the waiver will continue to be in force.
3.2 MEMBERS OK AMENDMENT TO MAKE HEALTH FLEXIBILITY PERMANENT
WTO members on 6 December 2005 approved changes to the intellectual property
agreement making permanent a decision on patents and public health originally adopted
in 2003. This General Council decision means that for the first time a core WTO
agreement will be amended.
The decision directly transforms the 30 August 2003 “waiver” into a permanent
amendment of the WTO Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS). That waiver made it easier for poorer countries to obtain cheaper generic
versions of patented medicines by setting aside a provision of the TRIPS Agreement that
could hinder exports of pharmaceuticals manufactured under compulsory licences to
countries that are unable to produce them.
This will now be formally built into the TRIPS Agreement when two thirds of the WTO’s
members have ratified the change. They have set themselves until 1 December 2007 to do
this. The waiver remains in force until then.
The latest decision comes a week after WTO members agreed to extend the transition
period for least-developed countries, allowing them until 1 July 2013 to provide protection for trademarks, copyright, patents and other intellectual property under the
WTO’s agreement. Least-developed countries had already been given until 2016 to
protect pharmaceutical patents.
“The agreement to amend the TRIPS provisions confirms once again that members are
determined to ensure the WTO’s trading system contributes to humanitarian and
development goals as they prepare for the Hong Kong Ministerial Conference,” Director-
General Pascal Lamy said.
“This is of particular personal satisfaction to me, since I have been involved for years in
working to ensure that the TRIPS Agreement is part of the solution to the question of
ensuring the poor have access to medicines,” Mr Lamy said.
The amendment is designed to match the 2003 waiver as closely as possible. Other
procedures used in 2003 are also matched, including a statement read out by the General
Council chair. In order to achieve this, delegations have been involved in intricate legal
discussions aimed at ensuring that the legal meaning and weight, and the hierarchy of
provisions, are preserved as exactly as possible.
The amendment completes a process that began with the declaration on TRIPS and health
that ministers made at the Doha Ministerial Conference in November 2001. The deadline
for least-developed countries to protect pharmaceutical patents revised in June 2002. This
was followed by the waiver in August 2003, which itself called for the eventual
amendment.
THE DECISION
Article 31(f) of the TRIPS Agreement says that production under compulsory licensing
must be predominantly for the domestic market. The concern was that this could limit the
ability of countries that cannot make pharmaceutical products from importing cheaper
generics from countries where pharmaceuticals are patented.
As with the 2003 waiver, the permanent amendment will allow any member country to
export pharmaceutical products made under a compulsory licence for this purpose. They
may need to change their own laws in order to do so.
So far, Norway, Canada and India have informed the WTO that their laws are complete,
while the Republic of Korea and the EU have said their new laws are on the verge of
coming into force.
A group of developed countries are listed as announcing that they will not use the system
to import.
A number of other countries announced separately that if they use the system as
importers it would only be for emergencies or extremely urgent situations. They are:
Hong Kong China, Israel, Korea, Kuwait, Macao China, Mexico, Qatar, Singapore,
Chinese Taipei, Turkey and United Arab Emirates.
A separate statement by General Council chair Amina Mohamed, Kenya’s ambassador, is
designed to provide comfort to those who feared that the decision might be abused and
undermine patent protection.
The statement describes members’ “shared understanding” on how the decision is
interpreted and implemented. It says the decision will be used in good faith in order to
deal with public health problems and not for industrial or commercial policy objectives,
and that issues such as preventing the medicines getting into the wrong hands are
important.
THE AMENDMENT
The amendment itself is in three parts. Five paragraphs come under Article 31 “bis” (i.e.
an additional article after Article 31). The first allows pharmaceutical products made
under compulsory licences to be exported to countries lacking production capacity.
Other paragraphs deal with avoiding double remuneration to the patent-owner, regional
trade agreements involving least-developed countries, “non-violation” and retaining all
existing flexibility under the TRIPS Agreement.
A further seven paragraphs are in a new annex to the TRIPS Agreement. These set out
terms for using the system, and cover such issues as definitions, notification, avoiding the
pharmaceuticals being diverted to the wrong markets, developing regional systems to
allow economies of scale, and annual reviews in the TRIPS Council.
An “appendix” to the annex deals with assessing lack of manufacturing capability in the
importing country. This was originally an annex to the 2003 decision.
The new Article 31 “bis” and annex of the TRIPS Agreement are attached to a protocol
of amendment. This in turn is attached to a General Council decision, which adopts the
Protocol and opens it for members to accept it by 1 December 2007.
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